Today we had a warm-up for tomorrow’s big jobs report. And the economic news hasn’t been so good:
– 1Q GDP was revised down to 1.9% from 2.2%. The previous four GDP quarters of Obama recovery: 0.4%, 1.3%, 1.8%, 3.0%. Keep in mind that research from the Federal Reserve finds that that since 1947, when two-quarter annualized real GDP growth falls below 2 percent, recession follows within a year 48 percent of the time. (And when year-over-year real GDP growth falls below 2 percent, recession follows within a year 70 percent of the time.)
– Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 383,000. Claims have now risen in seven of the past eight weeks. The four-week moving average for new claims increased 3,750 to 374,500.
– ADP said 133,000 private-sector jobs were created in May vs. analyst expectations of 150,000.
– Job cuts jumped by 53% in May from April in the United States, according to a report by consultancy firm Challenger, Gray & Christmas. CNBC also notes that “employers announced plans to cut 61,887 staff from their payrolls in May, 67 percent more than in the same month of last year. The figure represents the most job cuts since last September.”
– The Rasmussen Consumer Index find that 59% think the U.S. is currently in a recession.
This is all pretty much what you would expect to see in a low-speed economy. And recall what Goldman Sachs said the other day about how this all might affect the November elections:
Our own work also suggests results very close to 50 percent with most of the key economic variables. For any given model, we can estimate the run of economic data that would be needed to generate a “dead heat.” For example, a model using June head-to-head approval polls and vintage nonfarm payroll data from prior election years suggests. The “split decision” rate of GDP growth is almost exactly 2% in Q2 and Q3. Given the standard error of the model (more than 200,000 on the payroll “breakeven”, for example), our economic forecasts point almost precisely to a dead heat.
And as the Intrade chart shows, Obama’s odds for reelection have been dropping, while also smashing through some key moving-average support levels.